"It is crucial for advisers to know how to interact with vulnerable clients and to monitor for any red flags that shows the customer has been coerced in any way."

Assessing and defining the needs of vulnerable clients has long been an issue in the financial services industry and remains an important topic today. For advisers in the equity release market, this is as prevalent an issue as ever, making it essential that advisers have strategies in place that allow for the recognition of a person’s vulnerability.

Defining someone as vulnerable can be tricky, but if advisers are aware of certain warning signs within their client base they will be in a more educated position to provide their customers with the highest duty of care. This is particularly important in the equity release sector, where the most popular age bracket for taking out an equity release product is between 65 and 74, with the FCA deeming all customers in this age range as vulnerable.

In addition, The World Health Organisation found that 15% of adults over the age of 60 will suffer from a mental disorder. Furthermore, two thirds of British adults say they have experienced mental ill-health at some point in their lives.

So, it is crucial for advisers to know how to interact with vulnerable clients and to monitor for any red flags that shows the customer has been coerced in any way.

The nature of equity release, whereby older homeowners are making an important financial decision about the single largest asset they may own, means advisers need to be vigilant. In particular, they should be looking out for any mental health issues, language impediments, or life changing events, such as divorce or bereavement that could impact their client’s decision making.

At more 2 life, we are dedicated to championing responsible lending and working with advisers to raise awareness of the importance of thoroughly assessing the mental capacity of potential vulnerable clients. As part of this initiative, we have appointed a trained Customer Vulnerability Champion, who works closely with our call handlers to monitor any situation they deem to involve a person in a vulnerable position. Call handlers are encouraged to obtain and clarify as much information over the phone from the customer as possible. Should they conclude that the individual is in a vulnerable position, all details related to the case will be sent to the Customer Vulnerability Champion for further contact if necessary, whether the query has been resolved or not by the call handler.

Last year’s whitepaper from the Equity Release Council also reaffirmed that there needs to be more of a focus on adviser education about potentially vulnerable older homeowners. You can read more on the whitepaper here. Advisers should always be looking at the bigger picture and considering all of their clients’ circumstances, as well as being willing to challenge what a client says.

Many advisers may feel uncertain about how to assess mental capacity, but it is crucial that they bear this issue in mind to ensure they are acting in the best interests of their clients. Equity release is not a one-size-fits-all solution, meaning advisers need to be 100% sure that it is suitable for their clients. If speaking to a potentially vulnerable client, advisers should remain alert to any possible warning signs. Above all, they should be listening to their customers, raising any concerns immediately with colleagues or senior management and seeking extra support if necessary.

At the end of 2017, more 2 life hosted adviser sessions to help facilitate discussion about vulnerable clients, led by mental health expert Tim Farmer. With over 20 years’ experience in assessing mental capacity, Tim was on hand to provide insight into dealing with mental illness, as well as giving advisers practical advice on red flags to look out for.

Tim Farmer, managing director of specialist mental health practice at TSF Consultants, commented: Q“It’s great to see the issue of mental health becoming more widely discussed in the financial services sector. We need to make sure that potentially vulnerable people have their wellbeing safeguarded when making financial decisions, and advisers play a crucial role in ensuring this happens. For many older homeowners, an adviser is likely to be the first person they come to when considering equity release. So, it is vital for they educate themselves on spotting any warning signs when speaking with clients and knowing how to proceed in these situations.”

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